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UNITED KINGDOM

COUNTRY REPORT

HISTORY

The history of the United Kingdom begins with the invasion of the Roman Empire in 55 B.C. that made the British Isles more interconnected with the rest of mainland Europe. After the fall of the Roman Empire, the Angles, Saxons, Jutes and other tribes invaded parts of the British Isles during the 5th and 6th century. In 1066, after the decisive battle of Hastings, the Norman rule ensured stability in the country and consequently many institutions typical of the United Kingdom today were established such as a separate but established church, a system of common law, distinctive and distinguished university education, and a representative government.1 During the 14th and 15th centuries plagues and wars with France as well as civil wars such as the War of the Roses were the norm.2

Furthermore, the English Reformation of King Henry VIII during the early 16th century caused religious controversies with the Pope. After the unification of Wales the Reformation spread across the country. The following “golden age” of Queen Elizabeth I (1533-1603) was a period of prosperity and political expansion. Queen Elizabeth I funded the armament of merchant ships

1 http://www.state.gov/r/pa/ei/bgn/3846.htm2 http://www.infoplease.com/ipa/A0108078.html?pageno=3

sailing across the world's oceans, which laid the foundations of the mighty British Navy.3

Both Wales and Scotland that are part of Great Britain today were independent kingdoms that resisted the English rule. The English conquered Wales in 1282 and an act unifying the two nations politically and administratively was drafted in 1526. Scotland remained a separate parliament but was ruled under the English crown. In 1707, England, Wales and Scotland finally unified as Great Britain sharing only one Parliament at Westminster in London.4

As for Ireland, beginning with the conquest by the Angles and the Normans in the late 12 th

century and with large-scale migrations from Scotland and England in the 17 th century, Ireland was greatly controlled and regulated by Britain until the Anglo-Irish Treaty of 1921 that established the Irish Free State. After the WWII, Ireland became a republic but seven northern counties in the north of the Island that are Protestant remained part of the United Kingdom.5

At the end of the 18th century, the Industrial Revolution began in the United Kingdom. Technological breakthroughs have led to the emergence of factories, reduced the number of old artisan workshops and caused the transition from an agricultural economy to an industrial economy. In the late 19th century the United Kingdom became the richest state in the world that dominated about a quarter of the then known world. It also played a leading role in developing parliamentary democracy, in advancing literature, science and later pop music.6

After WWI, however, the empire began to crumble. Other nations, including the United States and Germany, had developed their own industries so the United Kingdom's comparative economic advantage had lessened, and the ambitions of its rivals had grown. The losses and destruction of WWI, the depression of the 1930s, and decades of relatively slow growth eroded the United Kingdom's preeminent international position of the previous century. At the end of WWII, in 1945, the British Empire was on the brink of collapse and at the end of the 1950s almost all British colonies gained independence.7 The second half of the 20th century witnessed the dismantling of the Empire and the UK rebuilding itself into a modern and prosperous European nation. As one of five permanent members of the UN Security Council, a founding member of NATO, and of the Commonwealth, the UK pursues a global approach to foreign policy.

The United Kingdom was a member of the European Union from 1973 to 2016, however on June 23, 2016 UK citizens participated in a referendum and chose to leave the EU. This “Brexit” was partly due to the country’s frustration with the influx of migrants and the remote bureaucracy of Brussels.8 This historic decision is likely to reshape UK’s place in the world. In early December 2017, the UK and EU reached an agreement on Brexit separation terms, which paves the way for talks on a transition period and a future trade deal early next year. The UK is expected to formally leave the European Union on 29 March, 2019.9

3 Ibid.4 http://www.state.gov/r/pa/ei/bgn/3846.htm5 http://www.infoplease.com/ipa/A0108078.html?pageno=36 http://www.nationsonline.org/oneworld/united_kingdom.htm7 "Background Note: United Kingdom." Background Notes On Countries Of The World: United Kingdom (May 2006): 1-6. Military & Government Collection, EBSCOhost 8 https://www.cia.gov/library/publications/the-world-factbook/geos/uk.html9 https://www.focus-economics.com/country-indicator/united-kingdom/trade-balance-GBP

GOVERNMENT

Political system

The United Kingdom of Great Britain and Northern Ireland is a unitary state with a constitutional monarchy. Scotland, Wales and Northern Ireland have a degree of autonomous devolved power. Head of state of the UK is the monarch (Queen Elizabeth II). Head of government is the prime minister. The bicameral British Parliament is the supreme legislative body in the United Kingdom, its seat is the Palace of Westminster.10

Political Structure:

Official name: United Kingdom of Great Britain and Northern Ireland Form of state: Parliamentary monarchy Legal system: Based on statute and common law; no written constitution; Scotland has its own legal system National legislature: Bicameral; the House of Commons has 650 members directly elected on a first-past-thepost basis; the upper chamber, the House of Lords (about 750 members), was reformed in 1999, when most hereditary peers lost their seats; 90 retain them pending further reform Electoral system: Universal direct suffrage from the age of 18 National elections: Next general election due on May 7th 2020Head of state: Queen Elizabeth II, who acceded to the throne in 1952 National government: Cabinet headed by the prime minister; the prime minister is appointed by the monarch on the basis of ability to form a government with the support of the House of Commons. A centre-right Conservative government took over from a Conservative coalition with the Liberal Democrats in 2015.Main political parties: Today there are four major political parties in the British parliamentary system:

The Conservative Party (frequently called the Tories) - the centre-Right party, currently led by Theresa May, which since 2010 has been in Government either in coalition (2010-2015) or alone (since 2015).

The Labour Party - the centre-Left party, led by Jeremy Corbyn, which was last in Government from 1997 to 2010.

The Scottish National Party - the party supporting Scottish independence, which is led by Nicola Sturgeon.

The Liberal Democrat Party (known as the Lib Dems) - the centrist, libertarian party, led by Vince Cable, which was the junior member of the Coalition Government of 2010-2015.Other parties: UK Independence Party; Plaid Cymru (Welsh National Party); Northern Ireland parties: Ulster Unionist Party, Democratic Unionist Party, Social Democratic and Labour Party, Sinn Fein.11

The Cabinet:

Prime Minister, First Lord of the Treasury and Minister for the Civil Service: Theresa MayChancellor of the Duchy of Lancaster: David LidingtonChancellor of the Exchequer: Phillip Hammond Home Secretary: Amber RuddSecretary of State for Foreign and Commonwealth Affairs: Jeremy Hunt

10 http://www.nationsonline.org/oneworld/united_kingdom.htm11 http://www.rogerdarlington.me.uk/Britishpoliticalsystem.html

Secretary of State for Exiting the European Union: David DavisSecretary of State for Defense: Gavin WilliamsonLord Chancellor and Secretary of State for Justice: David GaukeSecretary of State for Health and Social Care: Jeremy HuntSecretary of State for Business, Energy, and Industrial Strategy: Greg ClarkSecretary of State for Housing, Communities and Local Government: Sajid JavidSecretary of State for International Trade and President of the Board of Trade: Dr Liam Fox Secretary of State for Education: Damian HindsSecretary of State for Environment, Food and Rural Affairs: Michael GoveSecretary of State for Transport: Chris Grayling Secretary of State for Work and Pensions: Esther McVeyLeader of the House and Lord Privy Seal: Baroness Evans of Bowes ParkSecretary of State for Scotland: David Mundell Secretary of State for Wales: Alun Cairns Secretary of State for Northern Ireland: Karen BradleySecretary of State for International Development: Penny MordauntSecretary of State for Culture, Media and Sport: Matt HancockMinister without Portfolio (Cabinet Office): Brandon LewisChief Secretary to the Treasury: Elizabeth TrussLord President of the Council and Leader of the House of Commons: Andrea LeadsomParliamentary Secretary to the Treasury and Chief Whip: Julian SmithAttorney General: Jeremy Wright Minister of State (Business, Energy and Industrial Strategy) (Energy and Clean Growth: Claire PerryMinister of State (Home Office) (Immigration): Caroline Nokes 12

ECONOMY

The United Kingdom was the first industrialized nation in the world and its economy remains one of the largest economies in the world with a focus on service industries rather than on manufacturing as was the case in previous decades.13 It is a leading trading power and a financial center, having the third largest economy in Europe after Germany and France. The UK has large coal, natural gas, and oil resources, but its oil and natural gas reserves are declining; the UK has been a net importer of energy since 2005. Services, particularly banking, insurance, and business services, are key drivers of British GDP growth. Manufacturing, meanwhile, has declined in importance but still accounts for about 10% of economic output. 14

In 2008, the global financial crisis hit the economy particularly hard, due to the importance of its financial sector. Falling home prices, high consumer debt, and the global economic slowdown compounded the UK’s economic problems, pushing the economy into recession in the latter half of 2008. After a number of measures and austerity program implemented by the government, the public deficit still remains one of the highest in the G7, standing at 3.6% of GDP as of 2017, and the UK has pledged to lower its corporation tax from 20% to 17% by 2020. The UK had a debt burden of 90.4% GDP at the end of 2017.

In 2016, in the aftermath of the Brexit vote, the UK economy managed to maintain its solid momentum, especially in regards to consumer spending and services. However, in 2017 the UK’s economy began to slow. A sustained depreciation of the British pound has increased consumer and producer prices, weighing on consumer spending without spurring a meaningful

12 http://www.parliament.uk/mps-lords-and-offices/government-and-opposition1/her-majestys-government/13 http://news.bbc.co.uk/2/hi/europe/country_profiles/1038758.stm14 http://www.eubusiness.com/europe/uk

increase in exports. The UK has an extensive trade relationship with other EU members through its single market membership and economic observers have warned the exit will jeopardize its position as the central location for European financial services. Prime Minister Theresa May is seeking a new trade relationship with the EU following the UK’s exit.15 The United Kingdom is also seeking a free trade agreement with China.16

Economic Outlook:

UK economic growth is likely to slow next year, as private consumption dips and fixed investment is constrained by pervasive uncertainty generated by Brexit. Even if the pound regains some of its value, currency experts expect it in the longer term to remain at least 10% below where it was when the referendum happened. This means exports should get a boost as UK goods will be cheaper, but imported goods will get more expensive - some price rises for food, clothing and homeware goods have been seen.17 However, a healthy external sector and solid global demand should cushion the slowdown.18Trade prospects for the UK will largely depend on business reorientation and efforts towards non-EU markets. Free Trade deals with EU countries might help in the long run, but the UK will need to explore new markets beyond the EU.19 Agreeing swiftly on a transition period will be vital to providing certainty to firms and safeguarding investment in the UK.

Economic Indicators:

Growth Rates Employment rate in Millions

In 2016, Britain and Germany were the fastest economies in the G7. But in 2017 Britain has fallen to the bottom of the table as growth in other countries picked up, while growth in the UK has slowed. Over the past year manufacturing growth has picked up, services output has remained steady but the construction sector has slowed.

The number of people in work remains close to record levels. But over the three months to September it dropped for the first time in a year, providing a tentative sign the country’s jobs boom may be losing momentum. Unemployment rate - 4.3%.

15 https://www.cia.gov/library/publications/the-world-factbook/geos/uk.html16 https://www.cnbc.com/2018/01/30/uk-prime-minister-theresa-may-says-wants-free-trade-deal-with-china.html17 http://www.bbc.com/news/uk-politics-3281088718 https://www.focus-economics.com/countries/united-kingdom19 http://www.pwc.co.uk/services/economics-policy/insights/uk-economic-outlook.html

Whole economy productivity Consumer Price Index

Since the financial crisis, productivity has failed to pick up. A brief pick-up in productivity growth in 2016 appears to have been a false dawn.

The sharp fall in the value of sterling since the vote to leave the EU means that imports have become more expensive which has driven inflation to its highest level for five years. December 2017 consumer price inflation - 3%.

Interest rates Industrial Production

The Bank of England cut interest rates in the aftermath of the vote to leave the EU but that cut was reversed this November as the economy has been stronger than the central bank initially expected. (Base rate – 0.5%).

Industrial production in the UK is still struggling to recover from the recession, remaining around 7 per cent below its pre-recession size. The annual change in industrial production output in November 2017 was 2.5%.

The Housing Market Trade balance

House prices have risen faster than previously thought. Average house prices though have shifted lower as the way the average is calculated has changed to strip out the weight of a small number of high-end properties.

The UK exports more services than it imports but the reverse is true for goods, which drags down the UK’s net trade position with the rest of the world.

Public sector net borrowing Total debt

Public spending cuts have been a central theme since 2010 but the government is still struggling to close the UK’s budget deficit. It has been hampered by continuing weakness in economic growth and tax receipts.

The accumulated debt burden is still above 80 % of GDP – the highest peacetime level this century.20

20 https://ig.ft.com/sites/numbers/economies/uk#main-title

DEMOGRAPHICS

Nationality: Noun – Briton(s). Adjective – British.Population: 66,409,621 (January 2018 estimate) Annual population growth rate: 0.59%21

Major ethnic groups (2011 census): White 87.2%, black 3%, Indian 2.3%, Asian 2.3% Pakistani 1.9%, mixed 2%, other 3.7%.22

Major religions (2011 census): Christian (Anglican, Roman Catholic, Presbyterian, Methodist) 59.5, Muslim 4.4%, Hindu 1.3%, other 1.9%, unspecified or none 32.9%.Major languages: English, Welsh, Irish Gaelic, Scottish Gaelic.Education: Years compulsory – 12. Literacy – 99% among residents 15 and older. This is attributed to the universal public education provided to UK residents, both in primary and secondary schools.23

Health: Infant mortality rate – 4.3 deaths/1,000 live births. Life expectancy (2017 est.) – males 78.6 years; females 83.1 years.24

Work force distribution: Services 80.4%; industry 18.2%; agriculture 1.4%.25

Birth/Death rate: 12.1 births/1,000 population, 9.4 deaths/1,000 population (2017 est.)Median age: 40.3 years26

Urbanization: Urban population: 83.1% of total population (2017). Annual rate of urbanization: 0.82%.27

Major urban areas - population: London (capital) 10.313 million; Manchester 2.646 million; Birmingham 2.515 million; Glasgow 1.223 million; Southampton/Portsmouth 882,000; Liverpool 870,000 (2015).28

The UK population grew to an estimated 66.4 million in January 2018, and has been growing at the fastest rate for almost a century.29 Unlike previous episodes of growth, the major reason for this increase has been the high level of immigration. Its overall population density is 709 people per square mile (274 people per square kilometer), with England having a significantly higher population density than Wales, Scotland and Northern Ireland. As a member of the European Union, the UK had the third largest population. The majority of the population also lives in urban areas. Furthermore, The UK has high migration with net migration of approximately 332,000 people in 2015, which was one of the major arguments for leaving the EU. The rate of increase in the size of Britain's population has slowed significantly since the Brexit vote. The latest estimate released is that total net migration to the UK in June 2017 was 230,000.30

21 http://www.worldometers.info/world-population/uk-population/22 http://www.indexmundi.com/united_kingdom/ethnic_groups.html23 http://worldpopulationreview.com/countries/united-kingdom-population/24 https://www.indexmundi.com/united_kingdom/demographics_profile.html25 http://www.state.gov/r/pa/ei/bgn/3846.htm26 https://www.cia.gov/library/publications/the-world-factbook/geos/uk.html27 https://www.indexmundi.com/united_kingdom/demographics_profile.html28 Ibid.29 http://www.worldometers.info/world-population/uk-population/30 https://www.migrationwatchuk.org/statistics-net-migration-statistics

Migration over time Population Growth

SOCIAL PROGRESS INDEX:

The Social Progress Index is an aggregate index of social and environmental indicators that capture three dimensions of social progress: Basic Human Needs, Foundations of Wellbeing, and Opportunity. The 2017 Social Progress Index includes data from 128 countries on 50 indicators.31

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Acknowledgements:

Research and Data Development Provided by: Tamara Runtsova, Assistant Director of Research, Damian Fiala, Research Associate，under the Supervision and Coordination of: Dr. Gerard Janco, President. Updated in 2018.

31 https://www.socialprogressindex.com/?code=GBR